IMF Signals Upgrade to Global Forecast as Inflation Eases

Prime Highlights

IMF to publish higher revision of world growth at the end of July with moderating inflation and robust trade.
Gita Gopinath warns that financing risk and trade tensions remain top global risks.

Key Facts

April global growth projection was 2.8% for 2025; modest upgrade expected.
IMF calls upon countries to address protectionism in trade regimes and debt vulnerabilities.

Key Background

The International Monetary Fund (IMF) will update its projection of the world economy with stabilizing market trends and improved-than-predicted trade activity. In late July, the update will incrementally raise the existing 2025 growth rate prediction of 2.8%, on the back of improved macroeconomic readings such as declining inflation levels and improved early-year trade flows.

The IMF’s First Deputy Managing Director Gita Gopinath, however, noted that underlying vulnerabilities still exist that are spearheaded mainly by rising trade tensions, sharply rising global interest rates, and fiscal vulnerabilities in emerging markets. She added that despite inflation slowing down gradually, global uncertainty remains high and the underlying structural bottlenecks that are restraining growth—specifically in emerging markets—remain unchanged.

Speaking to the G20 meeting of finance ministers in South Africa, Gopinath stressed the need to maintain independence of central banks and proposed well-structured fiscal consolidation to save economic stability. She cautioned against increasing protectionism, as companies are hurrying imports and exports before impending tariff increases looming on the horizon, which would warp short-term trends in growth but is not necessarily a wager on long-term toughness.

The IMF further insisted on broader and more inclusive debt restructuring frameworks. Gopinath insisted on broadened access to the G20 Common Framework for middle-income countries, some of which have unsustainable debt burdens. With reduced capital flows to emerging markets and still-elevated interest rates in advanced economies, financing gaps are also the centre’s primary concern. She emphasized the need for multilateral co-ordination and debt interventions at the appropriate time to avoid long-term economic stagnation in vulnerable economies.